I hadn't seen this discussed but its actually a very important topic and i'd be curious if regular peeps are aware of the upcoming legislation or even care. I'm in the biz so its a topic that insurance professionals are discussing daily but really hasn't hit the mainstream. Quick recap: The 2012-2017 Re-authorization expires 9/30/17, and congress has been discussing/modifying proposals for some time now and facing tremendous pressure from the insurance lobby's about compensation cuts mostly and some other issues surrounding the gradual privatization of Flood Insurance, which is still a long way off IMO. Those of you that have flood insurance have certainly experienced noticeable increases in premiums, but despite those increases in revenue the NFIP has serious solvency issues (26 billion debt) and has taken tremendous losses around the country, i'm sure you all have seen that in the news. There is a massive amount of exposure in Florida which has been relatively claim free for a long long time, if FL ever (not if, but WHEN) experiences a Katrina event in a major city then those solvency problems could turn from severe to catastrophic. Attempts were made in 2012 to reduce the massive subsidies that have been provided for decades, but the premiums paid are still not actuarially sound but progress has been made. I'm not even sure if the regular Joe realizes just how deep the subsides have run in the past or how generous some of the compensation can be for those that haven't even participated in the program or purchased coverage. The current program is a bit outdated with caps or limitations in coverage levels, extremely high administration costs and this legislation should address some of those concerns but it still falls well short of being perfect. The NFIP plays an extremely important role with regards to disaster mitigation and if the dire predictions by the AGW types are even half right, it will play an even larger role in the next 10-20 years. Any thoughts?
Shouldn't this be left up to the private sector? Why am I subsidizing people who live in areas prone to flooding?
First you must remember that for the longest time, the Private sector wanted nothing to do with it, too risky. They are interested now, (selectively) but at premiums that make NFIP rates look a lot more attractive than ever before for the majority of properties. The biggest difference in Private vs public is that private carriers can offer better coverage, but the cost is also higher. I don't have the #'s in front of me but you'd be surprised at how many people have floods that are NOT in flood prone area's. Hurricane sandy would be a good example. The private sector doesn't really want all that exposure, its generally highly concentrated and risky, so when bad things happen (Floods) it happens across broad area's and affects everyone in the area. IF it was completely privatized (Sandy's example) then all those people that have no Flood coverage would get nothing. Even if it was a freak storm that might not occur in another 100 years. On paper there is nothing wrong with the concept of the NFIP, however because its part of FEMA the problem (see above) you have is that they pay out even to people that don't participate, because "its the right thing to do" and the more poor you are, the more generous those payouts are.
Flood insurance program under water... The country’s flood insurance program is sinking. Rescuing it won’t be easy. July 16,`17 — Time after time, as the river has risen and the water has crept up Roosevelt Street, Leni-anne Shuchter has fled the white clapboard home she bought more than four decades ago.
Get rid of it, make people buy insurance on the open market. If this is not possible then tough ****. Move.
After hurricanes Ivan and Katrina my insurance went through the roof, excuse the pun. It wasn't flood it was wind insurance. I still pay $1300 a year just for wind and only $350 for everything else. And we haven't had a major storm in what 10 years. Flood insurance should not be subsidized anymore than my wind insurance is subsidized......ZERO.
The idea of making payouts to people who never even had insurance certainly doesn't seem fair. I'm in coastal Florida, my wind and flood insurance is ridiculously high and I've never even had a claim. I'm not sure where I stand on this flood insurance issue. Generally speaking, I'm in favor of the private sector handling things like this. However, I've also had issues purchasing properties which were technically in the "100 year flood area" (or whatever exactly they call it) even though you'd never guess in a million years that they could possibly flood -- but mortgage companies required the ridiculously expensive flood insurance because of the 100-year flood possibility. You'd almost think the entire state is in the flood area, based on my buying experiences spread out over diverse areas. So it's not really just an issue of the rich people living beachfront, like some people might like to think.....it's entire counties in Florida, including areas that realistically are probably never going to make a flood claim. I guess in some ways it's almost like those of us "technically" in the flood area (but who will never see floods) are subsidizing the rich people living beachfront, via our premiums. Either way, curious to follow this topic.... Also, if flood insurance became prohibitively expensive I wonder two things: 1. would this lead to a huge number of properties being almost unmortgageable (which also means unpurchasable/unsaleable) for most people. 2. Currently I'm assuming most of us down here have flood insurance (which means we are contributing to the pool which will give us payouts if we have a flood.) If it became prohibitively expensive and everyone dropped it, what would happen if we did have a flood, would it become a natural disaster and the federal government would pick up the tab?
Omfg the flood insurance. Our insurance agency recommended flood insurance when we bought our house, so we said what the hell... why not? Well the first bill came in, and it was not what we were quoted, and the bulk of this overage was the flood insurance. We live near a river but on very high ground, this was just our being overprotective, so we tried to drop it. Tried. FEMA would not allow us to drop it because of this legislation. See the only people it seems who get this insurance do so because they are required to because they live in designated flood zones. We do not, but once on it, you must prove to FEMA that it is not a flood zone. Of course who designates flood zones you might ask? Why its FEMA. So we had to get FEMA to come out to write us a waiver declairing we were not in a flood zone to send to FEMA so they could grant our insurance permission to drop this insurance which was almost as much as the rest of our insurances combined. Took for-****ing-ever. In short... I hate this bill.
I think "whoever" determined the flood zones was overzealous. Flood insurance is already ridiculously expensive, if this new development is about to make it even more expensive, I hope they will at least go back to the drawing board and maybe narrow down the flood zones. I've had properties on high ground, places with granddaddy oaks that have obviously never seen a flood, I've been through hurricanes from Charlie to Matthew and never had a claim, but if I sat down and figured out what I've paid in flood insurance I would probably cry.
I had heard that the subsidies may end for the NFIP. Not sure how valid this is, but is probably needed. I moved from south Louisiana in 2015, less than one year later, the very area I moved from experienced catastrophic flooding. Many areas were not even in a flood zone. From all my friends and families experiences, many still ongoing, it was those who had NO flood insurance who got the quickest payout and were doing repairs right away. I have family who had flood insurance and are still dealing with the insurance companies to get the money to do repairs. They are using portable tables in their kitchens and drywall is still cutout around the house with concrete floors. I saw similar situations after Katrina. It was the uninsured who received money the fastest and were back on their feet. Many who were insured were screwed and never fully recovered. We should not be subsidizing flood insurance, period. While I lived in Louisiana, I paid, on average, and extra $100 per year in my homeowners policy just to subsidize the homeowners who lived on the coast (not flood insurance, but regular homeowners policy). I moved 10 years after katrina and was still paying it. No one should be subsidizing others choices to live in unsafe areas.
"Unsafe areas" is rather vague and subject to interpretation though. I touched on this in my earlier posts -- that perhaps the zones considered possible for flooding have been overzealously drawn. Anyhow, at the risk of being boring and repeating myself, I just touched on this in my last two posts on this thread. This isn't an issue that only impacts people who've chosen to live below sea level in Louisiana or are millionaires living beachfront in Florida. It also impacts a lot of us who realistically are never going to see a flood (but are probably subsidizing those other folks with our flood insurance premiums.)
Define ridiculously expensive. My insurance on a $150,000 house hit $3600 after Ivan with about $3200 just wind damage because I live south of I-10. It has come down to $1300 for and that through Lloyds of London.
If a home is a total loss in a flood zone insurance contracts should only rebuild on a different site to prevent multiple losses to the same property.
the thread finally wakes up! legislation is moving forward but slowly thanks to our lovely congress. I'll answer a couple of the above questions, since I'm still following the paper trail as this moves through congress and taking everything with a grain of salt knowing that it may change tomorrow or the next day. Yes, we DO currently subsidize high risk properties (the 100 yr zone) especially those properties that are older (pre-firm) meaning they were built prior to minimum elevation standards being developed, however we have begun reducing the subsidized portion gradually since 2012 and phasing it in over time. If they did it all at once, you would have seen $1,000 premiums jump to $4000 literally overnight so that original idea was scrapped with some grandfathering built in and a gradual increase into actuarial sound premiums. The private market is coming and creating competition, slowly, but its still a certainty that we will need NFIP for the foreseeable future because there are certain properties that the private market just plain isn't interested in. The standard 100 year zone cost ranges from $600 up to $3,000, but most fall into the $800-$1200 range. The 300 year zone costs range from $300 to $500 (not required by mortgage) We already have measures in place to limit/restrict rebuilding of totaled properties in high risk locations and properties that have had multiple floods, that idea has been around as long as we've had building codes. Once you suffer enough damage you must meet the newer codes which might include slab height, or impact windows or sprinklers (like the hawaii fire on the news recently) Florida has had a relatively good run lately on major flooding and hurricanes and the market has softened considerably which is benefiting the consumers financially and that's a good thing, until the next bad year then it might reverse course. Yes the Army corp of Eng is actively and continuously revamping the flood maps to put properties into the risk zones and remove some properties out of it. We've had some area's that were real head scratchers in my county where we said "WTF?" but for the most part I think they re-zoned my area pretty well.
Depending on the final result, you might like this bill, I think I will although I expect it will cost me money. weird that you had to go through that many hoops, all we do is print out a flood determination report online which takes all of 2 minutes and send in a copy, 3 weeks later its done. Also strange that you saw the flood premiums jump up higher than quoted unless the agent was an idiot and put in bad data when they ran the original quote, i've only had that happen once in 30 years in the business and it was simple clerical error. The reason they make it quite difficult to cancel coverage mid term is because if they didn't, people would constantly just buy coverage in the beginning of hurricane season and drop it ever winter, then repeat. Wind coverage is treated similar but you have a tad more flexibility and of course payment options that can go down to quarterly vs annual only with NFIP.
I do get what you're saying. However, the properties I"m speaking of are sitting on the coast or in the marshlands, propped up on stilts mostly. Flood zones are always being revamped. If the property's base level falls under the 100 year flood line, it should be in a flood zone and the measurements should be documented. Some property owners who think they would never flood may face a tough lesson one day like so many in the Baton Rouge and Denham Springs area did last year. Many truly believed it would never happen where they lived. They were wrong. I moved in the ozarks on top of a mountain.
the properties up on stilts pay very very little for Flood Insurance since the premium is calculated based on Lowest Living elevation. Most of the stilt properties I insure are 6-8 feet above the required flood level, (+6 rating) vs the average house which is 6-8 inches above. (-0- or +1 rating) the one's that you might be referencing are those that were built in the 60's, or 70's before they established flood plains in most area's, that are sitting 1 or 2 feet below the current flood plain, (and those are the most highly subsidized) they are grandfathered in because there was no code requirement at the time of construction, and they are everywhere, New Orleans is a great example. Also old tampa, old miami, old lauderdale, tons of properties at 5-6 feet above sea level at best, when anything being built today is being bumped up 2 feet higher. Which causes complications of its own, if you have an older neighborhood all built 50 years ago at 5 ft, surrounded by newer developments all propped up to 8 feet, the runoff tends to go right to the 5ft neighborhood and you get localized flooding.
The subsidy that the rest of the state had to pitch in for them was for their homeowners, so my point was that not only flood was being subsidized in unsafe areas. They had to get their coverage through Louisiana Citizens which is a last resort insurer when no one else would insure. Everyone else in the state had to pay a fee to Citizens on their homeowners policy yearly so that citizens could attempt to recoup some of it's losses after several hurricanes.
So, first, I think you should be able to buy any insurance you'd like, as long as you can afford it. If you can't, don't live in the area that would require it. Second, I don't think that this insurance requires subsidization. If you can afford to take the risk of living in an environment that inherently has a ton of risk, that's mostly a choice of your own making, and you should be willing to financially accept that risk. Where I run off of the reservation is when government decides to artificially increase the risk, ie, doing exceptionally risky dam repairs, or not, maintaining levies, dikes, etc, or not, and creating false senses of security that are frankly bogus at best. I love the FL coast, I love NO. But, frankly, it's super risky to liver in either. Having to depend on subsidies to offset that risk just seems inherently wasteful to me. It's like building schools on former waste dumps. It just doesn't seem like a good idea.
Once in a while, when I appraised homes for a living, I got called to verify if a home is or is not in the flood zone. This is one area where the Feds are extremely intrusive. Lenders really are who demands one has flood insurance. A home owned free and clear might not be forced to pay for such insurance. I believe, have to go back to check my records, but if you are in a 100 year flood plain zone, they can for4ce you to buy the insurance. BTW, FEMA has mapped out the country. And in some areas, your local government can survey the property to determine if it is in a hazard flood zone. In the case of a home in Oakland, CA, it was thought to be in a flood zone only due to a drainage canal, not because of other reasons. I measured the property line and it fell outside the flood zone.
yes, that would be correct, same goes for Florida, with citizens insurance which had a large market share that is dwindling fast because the market is currently soft. However its important to keep in mind that citizens insurance (state programs in general) were formed because the private market couldn't/wouldn't step up to the plate and accept the risk due to current or projected losses. If we ever have a EOT storm in Florida it would first clobber Miami/Dade and move across the state and get Tampa, the private market would turn to crap literally overnight. When (not If) Florida repeats 2004 with multiple storms, the soft market will do a 180 by the end of the week and the residents will be dealing with it for a few years until it softens again which may mean that citizens is back in play. There always will be a need for an insurer of last resort, along with associated fees for it, just due to the exposure, which is enormous.
yes, the 100 yr zone properties are virtually always required to purchase protection, because the funds are federally backed, they legally cannot force you to purchase in a 300 yr zone. A private mortgage has more flexibility but they assume the risk of the homeowner not buying coverage, losing their home, and just walking away and leaving the mortgage holder high and dry (no pun intended) and yes, the verification process isn't exact, because some properties have a piece in the zone but the building is out, etc... we've had times when we've run the verification 3 times to get the result we wanted. <very rare but it happens.
More and more, home insurers are riverboat gamblers who want your premiums (to invest with other gamblers) while pushing to have claims absorbed by taxpayers. They, a private sector, for-profit industry, basically want the luxury of having their wins privatized and their losses socialized. yes, I understand the important role property insurance plays in the economy, but I absolutely HATE the industry.
